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PUBLIC RECORD OFFICE

Reference -

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TITLIC.O. 8855 PUBLIC RECORD OFFCE, LONDON

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their joint guarantee it can be borrowed at 33 per cent, or with an Imperial guarantee at 3 per cent. Taking the former and larger rate of interest, the annual charge would be 175,0007

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15. As soon as the use of the two lines of cable warranted it, a sum of 150,0007. should be set apart yearly for maintenance and for laying new cables, at about the rate of an additional through line cach 15 years.

But for some time, until the trafic developed, 50,0001, yearly (with the use of the repairing steamers, the annual charge for which is included in the working expenses) would be sufficient to put apart for maintenance and new lines. As the revenue increased the larger sum could be dedicated to the purpose.

I do not propose redemption of the capital. The construction of new lines would stand in the place of amortization.

16. I have had a careful estimate made of the yearly expenditure. route it would amount to 125,680/. This includes the annual cost and insurance of By the present tive repairing steamers, and the cost of nine stations between Falmouth and Bombay inclusive, seven between Madras and Nelson inclusive, and twelve land stations between Madras, Adelaide, and Sydney inclusive. The annual cost of the steamers is set down at 15,3821. each. The cost of the land stations is set down at 1,5001. each, and the cost of the cable stations at 1,5001, each, with 20 per cent. added. Provision is also made for special electricians, besides the ordinary officers at the stations. The salaries are estimated at less than the rates that the companies give, but the Governments would not require to pay on the liberal scale the companies adopt. The working expenses of the Eastern and Eastern Extension Companies amounted, for the latest year of which I have a Return, to 272,3611. for all their stations, whilst on repairs and maintenance they expended 132,9671.

17. By the Cape route the estimate of annual expenditure is 73,3001., which includes the cost of twelve stations, seven special electricians, 20 per cent. for contingencies, and three repairing steamers The annual expenditure by the Pacific route as far as the mainland of British Columbia is estimated at 48,2007., which includes seven stations, six electricians, 20 per cent. for contingencies, and two repairing steamers. calculated the expenses across Canada and thence to England, because so much depends I have not on the nature of the arrangement to be made.

18. I have shown, I think sufficiently, that 200,0001. may be taken to fully cover annual working expenses, and this added to 175,0001. for interest, and 50,0001. (to commence with) for maintenance and new lines, will give together 425,000l. as the yearly expenditure. There will, besides, be for a few years the cost of existing subsidics, amounting to about 37,000l. annually, including the Tasmania cables subsidy.

19. The work that two cables can perform on the duplicate system, supposing every minute of the year to be occupied, and that the cables are up to the standard usually required, amounts to over 21,000,000 of words a year. if the demand required it, in getting through 10,000,000 of words on the two lines. There would be no difficulty, besides a very large number of words between the intermediate stations. routes taken may be, there will be many intermediate stations on which there will be Whatever the a large demand for communication. be worth a third of the through communication; and in taking 10,000,000 of words as estimate the intermediate communication to the capacity of the through communication, I have left a large margin for intermediate

traffic.

20. In the estimates I am about to make I take the through traffic at 5,000,000 of words, leaving a margin of 5,000,000 capacity for increases. The question now arises, will there be a demand sufficient to overtake 5,000,000 of words ? large amount of matter. To give a better idea of it, I may say it represents somewhat It evidently means a less than seven closely-printed newspaper columns each day, Sundays included. It represents, nioreover, about seven times the present through traffic between Australia and Europe. It represents about a seventh of the Atlantic yearly cabling since the late reductions in rates. It represents a little over an eighth of the number of words telegraphed yearly within New Zealand. It must be borne in mind that I am not esti- mating only the through messages between Europe and Australia. If the

line go by the Cape there will be through messages to and from Europe and Ceylon, Mauritius, Natal, and the Cape, to say nothing of less important places. If the line go by the Red Sea, there will be Java (which, I am informed, uses the cable largely), Singapore, and possibly, according to the nature of the agreement made, some other important stations for through traffic. If the line go by the Pacific, there will be Fiji, Honolulu, and probably branches from New Caledonia and Tahiti, and possibly branches from China and Japan. Irrespective of these reliefs, I am strongly of opinion that, with the great

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reduction in cost, cabling between Australasia and England will soon become as com- mon as it is now rare, and that it will be used for numberless purposes to anticipate correspondence, as also to carry on large financial transactions such as have grown up between the United States and England, and are unknown to Australasia,

21. I will give an estimate of receipts on the basis I have indicated (exclusive of Australian land charges) as follows:-

Estimate, with tariff of 1s. 6d. and 1s,, and intermediate traffic.

2,500,000 words at Is. 6d.

2,500,000 words at 1s.

Intermediate traffic

£

187,500

125,000

100,000

412,500

This estimate shows a small loss at hrst, which divided between the Governments would be inconsiderable. It would be covered by the saving which would be effected

if the Imperial Government guaranteed the loan, or by the subsidy which it should give in lieu of a guarantee. In any case, the development of traffic between the large num- ber of important centres concerned would soon convert the deficiency into a surplus. The above estimate only absorbs about half the capacity of the cables. I have purposely not taken into account the competition of the existing companies, if they fail to come to terms with the Governments. Any opposition of theirs will be only temporary. They cannot, with their costly arrangements, afford such low rates, and if the Governments do not buy them out, there will be much less money on which to pay interest.

22. The responsibility should, in my opinion, be divided in such manner as might be agreed on, based either on population or on the use of the cable, or partly on both, or possibly it will be found easier to fix the division by mutual agreement.

route.

23. It would be very desirable that the Postmasters-General of the various Colonies should meet and discuss the whole question. If a combination of the kind I have indi- cated cannot be arranged, then the Governments should consider what is the next best course to pursue. The existing companies are anxious to make arrangements, but all their proposals lead to maintaining the present monopoly and to depending only on one If the Colonies are not inclined to undertake the charge of the business, they should aid another company by another route, so as to secure two routes and competition. 24. If care be taken in any agreement entered into with a new company to give ample power to the Governments to buy out the cables constructed, an arrangement with such company might be made the stepping-stone to the absorption by the Governments of two cable systems, as proposed in this memorandum.

25. I

may, in conclusion, express the hope that weight will not be attached to the usual arguments which, on behalf of the existing companies, will be put forth in opposi- tion to the proposals herein sketched out. It will probably be alleged that cheapness will not materially increase traffic, that the business is risky, that cables cannot safely be laid in deep waters, and that competition has a weakening effect. It may also be argued that the Indian Government will throw obstacles in the way. The companies always seem unmindful that the Government of India might do a great deal more for English Colonial Governments than for commercial companies, whose operations concern not only the Colonies, but other countries, such as China and Japan. have misled many people, myself, I confess, amongst the number. It is owing to belief The arguments referred to in them that for so many years private enterprise has monopolized the control of the most valuable adjunct to the material and intellectual improvement of the populations scattered over the globe. All that can be said of the Governments retaining the charge of land telegraphy can be repeated with greater force with regard to taking possession of the means of cable communication between the various portions of Her Majesty's dominions. To allow such communication to be taxed for private profits is more out of harmony with the spirit of the age than would be a renewal of a tax on window glass or printing paper.

Wellington, February 5, 1887.

(Signed)

JULIUS VOGEL.

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